Globalization trends in the business world today require cross-cultural and cross-border interactions between nations. Increasingly, businesses are entering global markets with new products or profitable supply chain as technology advances. An example of this would be companies that are sourcing their supplies across national borders.

Trade war between China and the United States may be forcing many companies to withdraw from China due to tariff increases. Yet, China’s status as a manufacturing powerhouse with a global reputation continues to hold firm despite such economic turmoil. All types and sizes of companies consider China as a sourcing hub by using a sourcing agent. This Asian country, which is also highly populous, has become one of the most popular sourcing destinations for multinational corporations for a number of reasons:

China is one of the Asian countries where Western businesses can find lots of suppliers. Manufacturers purchase raw materials or subcomponents of different products from these suppliers and then turn them into final, sellable products. Therefore, manufacturers of textiles, apparels, electronics, automobiles, toys, cutlery and machinery can save a great deal of money by setting up a supply chain in China.

A number of trading companies and sourcing agents operate in China to bridge the linguistic and cultural gap between overseas buyers and Chinese suppliers. Regardless of where you reside in the world, collaborating with these individuals can greatly reduce your overall expenses.

There are many manufacturing companies in China, which contribute greatly to China’s reputation as a global manufacturing hub. It has excellent infrastructure, including roads, air, railways, ports, and bridges, which make transportation easy and convenient.

This well-developed infrastructure allows buyers to save time and money, which is reflected in the final product price. Moreover, China also has a vast labor market that supplies skilled and efficient workers to a variety of industries in the country. Multinational companies find China an attractive sourcing destination because of cheap labor and efficient transportation.

China is one of the world’s most technologically advanced nations without a doubt. With the country’s intense technological capabilities, large-scale production is possible. Every factory in China has the best equipment and tools to increase efficiency and productivity while reducing production costs.

China has already embraced artificial intelligence (AI), cloud computing, and other disruptive technologies for supply chain management. With these technologies, the country has become a leading sourcing hub for major global companies and has brought about a lot of innovation in its supply chain.

China has a huge supplier network that imports raw materials and components from other countries or sources them from other factories. Here’s how the factories help each other by providing materials and saving each other time and effort. For multinational corporations, sourcing agents in China have connections to all these suppliers and manufacturers.

Even when Chinese suppliers have to import materials from other countries, they usually do it in bulk, which lowers the cost. Thus, businesses that source from China can save a lot on production costs and enjoy the convenience of offsite production. Unit costs can be reduced further by reducing packaging costs, using durable packaging, and designing easy-to-manufacture products.

Consumers today are more ethical and moral than ever before. They want eco-friendly goods that reduce carbon footprints and comply with ecological standards. With the rise of the internet, companies are also becoming more aware of their social responsibility because a wrong move can ruin their reputation. Hence, Chinese sourcing teams are focusing on sustainable production and procurement.

China has a well-developed export industry, so finding suppliers and manufacturers who follow international compliance standards isn’t hard. In China, workers can’t go on strike and disrupt the production chain like they can in Indonesia and Vietnam. Every worker in China gets the best working conditions. In addition, the government’s anti-pollution crackdown has led to more green investment in the country, which makes China an ideal location for sustainable manufacturing.

Speed of service is one of the biggest deal-breakers in supply chain. Speedily sourcing the wrong products isn’t a good idea. The sourcing process needs to be more demand-driven and aligned with consumer preferences to unlock profitability. Companies can reduce inventory-related issues and increase return on investment that way. Due to China’s production maturity, finding suppliers with agile production establishments is easier.

An excellent way to unlock agility in production is near-shoring, which means bringing the production unit closer to the main market. Today, the consumption epicenter is skewed more towards the East. China is now being considered by companies from all sectors – apparel, textiles, cosmetics, technology, automobiles, etc.

China has tremendous sourcing opportunities for businesses all over the world. Businesses can rely on China’s low cost of production, workforce maturity, and talent pool for total supply chain solutions. For this reason, businesses should create a China wholesale sourcing strategy.

However, starting a China supply chain from a different country isn’t always easy. You’ll probably have to deal with the repercussions of the trade war between China and the US if you live in the US. As a result of the economic conflict between the two superpowers, you won’t be able to avoid tariff fluctuations.  Now you have to be extra cautious when sourcing materials from China and take the right measures to avoid complications.

Here’s how to maintain a China supply chain.

Due to the huge supplier base, many people have started sourcing businesses to help foreign companies. These sourcing agents bridge the gap between material buyers and suppliers/manufacturers in China.  Since China has so many suppliers and manufacturers, it can be hard for a layperson to find and deal with Chinese suppliers. Luckily, they can find a reliable sourcing agent in China.

China sourcing agents have the right network of suppliers and manufacturers. It’s their job to find and secure suppliers for their clients, supervise production, and ship orders. Business can save time and money by not having to visit each supplier in person. However, make sure your sourcing agent in China has a good track record and detailed knowledge of the entire supply chain.

Freight quotes are an important point to mention. You should give your sourcing agent in China at least a week to respond to your quote request. Whenever you get quotes, compare them before making a decision. In this way, you’re more likely to find a cost-effective supplier in China.

It’s typically not enough to just contact a reliable sourcing agent in China and rely solely on that individual’s expertise and experience. As an importer, you need to know the technical nitty-gritties of supply chain. The shipment value is one of the most important things to consider when importing from China. Customs can penalize you if you declare an inaccurate shipment value. Also, you need to know incoterms, which are standard freight terms used in international trade. CIF (Cost, Insurance, and Freight), FCA (Free to Carrier), EXW (Ex Works), and FOB (Free on Board) are some examples.

Customs may ban you from further import activities if you declare the shipment value wrong, and you could have to pay a hefty fine or associated costs. Make sure you’re declaring an accurate shipment value to avoid these charges and keep the supply chain running smoothly.

The production process may be monitored by a sourcing agent in China. It’s a good idea to stay involved too. The first thing you need to do is make sure you’re working with the right factory in China. It’s up to the manufacturing unit to make sure you’re getting what you pay for.

You should give your supplier clear product specs so the factory can follow them. To make sure the final product meets your specifications, ask for a quality control report. Sometimes you’ll find that the quality isn’t consistent across batches, or the product isn’t like the sample you got earlier. Regardless, you have to make sure these defects don’t leave the factory.

Supply chain management with a foreign country can be tough because of language barriers. If you’re working with Chinese suppliers, you might not always find someone who speaks English. When there’s a communication gap, it’s hard to explain your specifications. Due to double-work involved in fixing mistakes, this leads to quality issues, design issues, and time loss.

If you want to maintain an abundant supply chain in China, you should learn Mandarin. You’ll have an advantage if you know the local language, even if you work with a sourcing agent in China. Not only will you understand what they say, but you will also benefit from the ability to communicate your own ideas to them more clearly. Before you sign any deals with Chinese suppliers, check out some online Mandarin classes.

Last but not least, Chinese suppliers offer a variety of payment methods. If the supplier doesn’t comply with your terms and conditions, you get your money back. There are times when you can get your money back if there’s a delay in delivery or if there’s a discrepancy in quantity or quality. Be aware of the different payment methods available to you and the terms and conditions that define your monetary transactions.

Credit card payments are accepted by most Chinese suppliers. If the supplier doesn’t meet the terms and conditions of the contract, these companies usually refund your money. You can use PayPal or Western Union when working with a sourcing agent in China or directly with suppliers.

Here are some tips for starting and maintaining a China supply chain. Despite the China-US trade war and COVID-19 pandemic, China’s economy continues to be a global manufacturing and sourcing hub. You’ll be part of a well-established supply chain network in Asia that’s driving global businesses once you know the steps involved. With a robust China wholesale sourcing strategy and connecting with the right suppliers, you should be able to take your business to new heights.

AROOM GLOBAL is an expert China sourcing agency that has helped customers manufacture and source products from the world’s factory. Contact us at info@aroomglobal.com or visit our website to learn more about China sourcing and manufacturing services.